10 GRC Professional • Autumn 2013
IN DEPTH
After instituting proceedings in March against
Luv-a-Duck, a duck meat supplier, for misleading
and deceptive promotion and supply of its
products as "range reared and grain fed", ACCC
Commissioner Sarah Court warned: "The ACCC's
Compliance and Enforcement Policy lists credence
claims as a new priority area, particularly those
in the food industry with the potential to have a
significant impact on consumers."
ACI SAYS: It has never been more important for
boards and senior management to be engaged with and
to make sure that compliance and risk management
are consulted when strategic activities try to appeal to
specialised or new consumer trends, or look for creative
ways to differentiate products. GRC professionals
need to be at the start of this process to assist with the
execution of a more effective (and compliant) strategy
to achieve intended business outcomes.
While the basic underlying regulatory principle is
that any product claims made must be true, managing
the risks associated with this kind of marketing or
product strategy can be a little more complex when
definitions and consumer understanding of what is
meant by a statement, may be in a grey area.
Egg claims
The poultry industry has become the world's leading
protein source: chicken meat and eggs are accessible,
versatile, cheap and cost-efficient to produce and
easily transported and stored.
For Australian consumers, poultry as a food
staple has spawned a set of alternatives and variants:
free range, vegetarian, RSPCA-approved, organic,
barn-laid, cage-free -- the descriptors have literally
outrun their definitions, with terms not commonly
under stood or agreed upon.
Although last year saw a crescendo of court-
enforced undertakings for misleading or deceptive
labelling of 'free range' products, eggs have drawn
the ire of the ACCC since its earliest days.
In 1996, the health benefits claims about eggs
enriched with omega--3 fatty acids were found to
be misleading or deceptive, a nd health benefits
claims have since come into their own, requiring
new standards from Food Standards Australia New
Zealand (FSANZ). The misleading brand names 'Safe
Eggs' and 'Heart Smart' also had to be withdrawn, and
standard-testing procedures implemented to quantify
the omega--3 content of eggs.
In 2011, when an egg wholesaler was ordered by
the Federal Court to pay $50,000 in civil penalties
for falsely selling its eggs as free range, the ACCC
said the proceedings should act as a warning to the
Australian egg industry that selling eggs that are not
true to label is a serious matter that would receive
strong enforcement action to stop similar conduct.
A similar case involving the term 'organic' in 2007
was won by the ACCC despite the difficulty posed
given the absence of any recognised definition of the
term. The defendants paid $270,000 to assist in the
development of a national standard for organic and
biodynamic produce, and it has been largely left to
industry to repeat this for 'free range' claims.
The composition
of food, origin,
means of
production
and potential
health effects
now weigh upon
purchasing
decisions.